Gas prices crimp back-to-school traffic

Retailers in back-to-school mode are keeping the high price of gas in mind as consumers try to stretch dollars

This year back-to-school shopping is focused on the price of paper and the price of gas.

“We’re seeing a trend – mom is looking to spend her back-to-school dollars at fewer stores and where possible, online, so she doesn’t have to drive,” said John Fanous, vice-president of shopper marketing at RedFlagDeals and Mediative.

RedFlagDeals.com aggregates deals and discounts at Canadian retailers, conducts consumer research and shares consumer research insights from retailers.

Gas prices in Toronto were 131.9 cents a litre on Thursday, up just a little more than two cents over the same time last year, but gas prices peaked in June at 144 cents a litre, said Dan McTeague, a former MP who blogs about the price of gas at tomorrowsgaspricetoday.com.

When prices climb that high, retailers are affected, he said.

“Prices have remained stubbornly high since at least the beginning of February. That means people have had to reach deeper into their pockets and discretionary spending has been affected and it’s definitely impacted retailers,” he said.

This back-to-school season, retailers are selling paper products at unheard-of discounts to ensure they become the destination shoppers spend their gas money on.

At Staples, 80-page Hilroy notebooks were selling for $.05 cents each on Thursday; 150-pack lined paper refills were $.10 cents per package and a 24-pack of Crayola crayons was $.25 cents.

A week earlier it was Walmart selling paper at the same rock bottom prices – representing discounts of up to 50 per cent over 2013. It is still selling copy paper at $3 for 500 sheets.

“We took items on mom’s list that we knew were important. All of those are iconic and pretty much in everyone’s basket. We’ve really made a lot of investment to help mom save money,” said Mark Hilton, Walmart Canada vice-president of merchandising, home.

This week at Walmart the iPad mini 16 GB is on sale for $288.

Walmart has also invested in e-commerce, doubling the number of back-to-school items available for sale online.

Online shopping for back to school is expected to grow 16 per cent year this year over last, said Fanous.

“The number one back-to-school shopper is mom and this year she is being challenged to buy more things for the family – including electronics, but because of the soft economy, she has to buy more with less,” said Fanous.

“Ten or 12 years ago, a kid in high school or Grade 8 had no expectation of having a laptop. Now it’s almost an expectation or a requirement. Same goes for cell phones. It used to be a nice-to-have, now it’s almost omni-present.”

It’s also a time of the year when parents sample new grocery items for school lunches and for grown children headed to university, according to Fanous.

Combined with back-to-campus, back-to-school is the second-largest sales event of the year for Target (after Christmas), according to former spokesperson Lisa Gibson.

This year Target is also focusing on one-stop shopping and playing to the trends of customization, matching accessories – backpacks and lunch boxes – and patterns including chevrons, plaid and camouflage.

“Based on our research, moms begin shopping two to five weeks before the start of school,” said Gibson.

“Last year Target only had stores open in certain markets (parts of Ontario and Western Canada) during the back-to-school season and most of the locations that were open were brand new so we consider 2014 to be our first national back-to-school season here in Canada.”

Walmart is also emphasizing style and design in addition to low prices this year, offering bright dorm accessories and deals on small appliances.

“We’re really focused on fashion because we know that is what the customers want at amazing prices. What we find is, when we offer the right fashion at the right prices, the customer really responds,” said Hilton.

Walmart is also experimenting with new delivery systems. Beginning August 26, it will launch a pilot project that will allow customers to order online and pick up their order at lockers installed at select GTA Walmart stores, so they don’t have to worry about being home for postal delivery or about lining up in-store to pick up their order. Some of the lockers will be accessible 24-7.

While lined paper remains a big driver for retailers during back-to-school, USB memory keys are now sold up at the front of the store, alongside the paper, pens and backpacks, said Hilton.

The best-selling small appliance for back-to-school at Walmart is the single-cup Keurig coffee maker.

The low back-to-school prices for lined paper seem to be driving sales despite an overall decline in paper sales in North America.

While Canadian retailers say their back-to-school paper sales remain robust, sales of uncoated free sheet paper (the kind used in notebooks) have been declining between two and four per cent a year since the turn of the century, according to Bonny Skene, a spokesperson for paper products manufacturer Domtar.

Prior to 2000, the demand for paper in North America had been growing at about the same rate as the GDP.

Globally, demand for paper is increasing about .2 per cent a year, driven primarily by developing economies, but the decline in North America has led Domtar to seek out new markets for paper products, including personal care products, said Skene.